Currency transactions and issues

More About Currency transactions and issues

Tax Analysts provides news, analysis, and commentary on tax-related topics, including the latest developments in treatment of currency transaction tax.

Currency transactions are an important tax issue for businesses operating internationally because the taxation of currency movements and transactions varies by country, adding complexity to their financial reporting process. In the United States, the general tax treatment of foreign currency transactions in the United States is governed by section 988 of the Internal Revenue Code. Foreign currency gains or losses that result from branches that operate in currencies that are different from their owner are governed by section 987.

Tax Analyst's coverage of currency transactions is not limited to the United States because the transactions create tax issues that must be addressed in every country. In Canada, volatility of the Canadian dollar has had an effect on the taxation of overseas investments in foreign exchanges in recent years ("Canadian Taxation of Foreign Exchange Transactions"). Additionally, speculation that China was planning on implementing a so-called "Tobin tax" on speculative currency and trading transactions roiled the market in that country in early 2016.